Sony Leaks: CEO Asked for Memo on How to Take Record Company All Digital
The leaked Sony files on Wikileaks are pouring out odd sorts of information. For instance: Sony CEO Michael Lynton asked Dave Goldberg, head of San Francisco based consulting company Survey Monkey, if it were possible to make Sony Music go all digital. This was just last summer, and not a totally inconceivable idea given that streaming now exceeds CD sales.
Goldberg, who’s been a behind the scenes player in digital music for a while, wrote the proposal but warned Lynton of the challenges:
“If you still want to discuss this after you digest this, I am happy to find a time to come down to talk about it more. I think this amount of reinvention has rarely been done inside a public media company and it would be tough for Sony as a company to stomach the complaints from artists, employees and related parties (RIAA budget would be slashed, as an example). We would have to really decide if it was possible if you agreed with my thesis. I would also want to do a lot of actual work prior to implementing to validate the data behind the assumptions and understand the sequencing. I think it is a two-three year project to shrink the company down to the end state with a lot of noise in that period. Best, Dave.”
Goldberg’s memo envisioned a radical new world for the record biz: “The record company needs to act like a music publisher for new releases- putting up very little money but not trying to hold artists for long contract periods or to keep as much of the revenue. Advances would be $50k with a 40% revenue share after the advance. …Most fixed headcount in new releases will need to be eliminated, artists will need to be paid quickly and transparently, deals will need to be simple and fair and catalog replenishment is the only goal of the new release business. Artist contracts that have large fixed marketing costs will need to be restructured or sold off as there will no longer be headcount to do the work. New releases will be tested on consumers before added money is spent to ensure that it isn’t wasted. In short, the new release business will become like an independent label.”
Lynton and Goldberg plotted a meeting after the memo was written at the Luxe Hotel in Beverly Hills. It’s not clear from the emails if Lynton ever shared his idea with Doug Morris or anyone at Sony Music. And Lynton made sure to tell his friend: “This will remain between us.” Until now.